intern
ation
al bu
siness, 5
th edition
chapter 11international strategic management
11-2
Chapter Objectives 1
• Characterize the challenges of international strategic management
• Assess the basic strategic alternatives available to firms
• Distinguish and analyze the components of international strategy
11-3
Chapter Objectives 2
• Describe the international strategic management process
• Identify and characterize the levels of international strategies
11-4
International Strategic Management
International strategic management is a comprehensive and ongoing
management planning process aimed at formulating and implementing strategies that enable a firm to
compete effectively internationally.
11-5
Strategic Planning
The process of developing a particular international strategy is often referred
to as strategic planning.
11-6
Fundamental Questions
• What products and/or services does the firm intend to sell?
• Where and how will it make those products or services?
• Where and how will it sell them?
• Where and how will it acquire the necessary resources?
• How does it expect to outperform its competitors?
11-7
Factors Affecting International Strategic Management
• Language
• Culture
• Politics
• Economy
• Governmental interference
• Labor
• Labor relations
• Financing
• Market research
• Advertising
• Money
• Transportation/ communication
• Control
• Contracts
11-8
Sources of Competitive Advantage
Global efficiencies
Worldwidelearning
Multinational flexibility
11-9
Global Efficiencies
Location efficiencies
Economies of scale
Economies of scope
11-10
Location Efficiencies
Mercedes-Benz has achieved economies of scale by focusing production of its M-class at its assembly plant in Vance, Alabama.
11-11
Strategic Alternatives
Home replication strategy
Multidomestic strategy
Global strategy
Transnational strategy
11-12
Figure 11.1 Strategic Alternatives
Global StrategyFirm views the world assingle marketplace. Goal is to create standardizedproducts.
Home ReplicationFirm uses core competency or firm-specific advantage
Multidomestic StrategyFirm operates as a collection of relativelyindependent subsidiaries
Transnational StrategyFirm combines benefits of global scaleefficiencies with benefitsof local responsiveness
Low HighPressures for Local Responsiveness/Flexibility
Pre
ssu
res
for
Glo
bal
Effi
cie
nci
es
High
Low
11-13
Components of International Strategy
Distinctivecompetence
Scope of operations
Resourcedeployment
Synergy
11-14
Distinctive Competence
• Answers the question
– What do we do exceptionally well, especially as compared to our competitors?
• Represents important resource to the firm
11-15
Scope of Operations
• Answers the question
– Where are we going to conduct business?
• Aspects of scope
– Geographical region
– Market or product niches within regions
– Specialized market niches
11-16
Resource Deployment
• Answers the question
– Given that we are going to compete in these markets, how will we allocate our resources to them?
• Resource specifics
– Product lines
– Geographical lines
11-17
Synergy
• Answers the question
– How can different elements of our business benefit each other?
• Goal is to create a situation where the whole is greater than the sum of the parts
11-18
Developing International Strategies
Strategyformulation
Strategy implementation
11-19
Figure 11.2 Steps in International Strategy Formulation
Develop a mission statement
Perform a SWOT analysis
Set strategic goals
Develop tactical goals and plans
Develop a control framework
11-20
Mission Statements
• Clarifies the organization’s purpose, values, direction
• Communicates firm’s strategic direction
• Specifies firm’s target customers and markets, principal products, geographical domain, core technologies, concerns for survival, plans for growth and profitability, basic philosophy, and desired public image
11-21
Mission Statements
• Wells Fargo– Satisfy all our customers’ financial needs,
help them succeed financially, be known as one of America’s great companies and the number-one financial services provider in each of our markets
• Carpenter Technology– Major, profitable, and growing international
producer and distributor of specialty alloys, materials, and components
11-22
SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
11-23
Environmental Scanning
An environmental scan is a systematic collection of data about all
elements of the firm's external and internal environments, including
markets, regulatory issues, competitors' actions, production costs,
and labor productivity.
11-24
Figure 11.3 The Value Chain
11-25
Strategic Goals
Strategic goals are the major objectives the firm wants to
accomplish through pursuing a particular course of action.
11-26
Tactical Goals and Plans
• Middle management issues
• Details of implementation
• Examples
– Hiring
– Compensation
– Career paths
– Distribution and logistics
11-27
Control Framework
A control framework is the set of managerial and organizational
processes that keep the firm moving toward its strategic goals.
11-28
Figure 11. 4 Levels of International Strategy
11-29
Corporate Strategy
• Single-Business Strategy
• Related Diversification
• Unrelated Diversification
11-30
Advantages of Related Diversification
• Less dependence on single product
• Greater economies of scale
• Entry into additional markets more efficient and effective
11-31
Business Strategy
Differentiation
Focus
Overall cost leadership
11-32
Functional Strategies
Financial
Marketing
OperationsR&D
Human resources